CFPB affirms ECOA applies to existing borrowers

In an advisory opinion issued today, the CFPB affirmed that the Equal Credit Opportunity Act and its implementing regulation, Regulation B, protect consumers who are actively seeking credit as well as those who have sought and received credit. “This has been the longstanding position of the bureau, and the view of federal agencies prior to the bureau’s creation,” the CFPB noted.

However, “[d]espite this well-established interpretation, the bureau is aware that some creditors fail to acknowledge that ECOA and Regulation B plainly apply to circumstances that take place after an extension of credit has been granted, including a revocation of credit or an unfavorable change in the terms of a credit arrangement,” the advisory opinion said. “In addition, the bureau is aware that some creditors fail to provide applicants with required notifications that include a statement of the specific reasons for the adverse action taken or disclose an applicant’s right to such a statement.”

While the bureau stated that its view is supported by legal precedent, the CFPB acknowledged in the opinion that “a few other district court decisions have interpreted ‘applicant’ to include only persons actively seeking credit,” but that “no court of appeals has endorsed these district courts’ narrow reading.” The advisory opinion is consistent with a friend of the court brief filed in December by the CFPB, Department of Justice, Federal Reserve and Federal Trade Commission.